For Shore?

March 27, 2009 6:06 AM

I'm ready to start a savings account. Should I start one with ShoreBank, since they have a relatively high APY and seem to be "socially conscious"?

Based on this post on Get Rich Slowly (which has over 1,200 comments), ShoreBank seems to have the highest APY. But then, that's so volatile given the current crisis that I wonder how much that really means.

I also wonder how accurate all this information is. For instance, I noticed that HSBC was listed as having a certain APY, but then if you went to their website there was fine print about how it was the APY as of some date a couple months ago. That's some pretty misleading airbrushing they're doing on themselves, since the rates have been steadily plummeting. My point being: how do I know ShoreBank (or any bank) isn't using similarly misleading fine print? (I haven't found it very easy to get clear information from ShoreBank's website.)

Most of the comments about ShoreBank in the Get Reach Slowly thread are positive, but this person makes it sound like the initial process of signing up was a bureaucratic nightmare. Also, everyone seems underwhelmed with the web interface.

Its image as a socially conscious bank is appealing. But a lot of what they consider socially conscious seems to be investing in "faith-based organizations." My views on religion are similar to those of Christopher Hitchens, Sam Harris, and Bill Maher, so I don't see investing in churches as a good thing per se. OTOH, (a) if they're specifically investing in church programs that happen do good charity/community work, then that's good, and (b) I obviously don't need to be a huge fan of every single client of the bank I open a savings account with.

It seems like everything about savings accounts on the web includes lots of praise for ING, but their APY is abysmal. That said, I'm completely open to anything.

(I have seen this AskMe question about ShoreBank, but that's outdated since it was back in the old days of early 2008.)

posted by Jaltcoh to work & money (13 comments total)

An few important things to consider:
- ALL savings account rates are pretty low. Online "high-yields" are bouncing somewhere between 1.5-3%. Brick and mortar banks are generally next-to-nothing.
- Liquid savings are not great investment vehicles, so the difference between 1.5 and 3% on a relatively small balance is not going to make or break you.
- Savings rates are extremely volatile and not gauranteed. If you pick the highest yield today it may not be the highest yield tomorrow. This was true when savings rates were rising astronomically, and was true when they were tumbling down.
- CDs are good investments for your liquid savings when savings rates are falling, but terrible when they are rising. Make sure your bank offers CDs and act accordingly.
- Savings accounts, in theory, should not be accessed heavily--that's what checking accounts are for--so the feature set of the website shouldn't make much of a difference.
- Shore's 2.8% APY is as of 3/10.
- Rate chasing is not worth the time or effort it takes.

I've found after experimenting with several banks over the past few years that it is much, MUCH easier to deal with as few financial institutions as possible, and in reaction have moved all of my accounts to a local credit union.

I have used ING Direct in the past when they were at the forefront of the high-yield online savings account craze. I've never had any problem with them and their website is pretty robust. They have heavily diversified their offerings to include insurance, checking, investments, and even mortgages. They have since been outpaced by numerous other online banks in terms of just the savings account though. Transfers outside the bank took 2-3 days at the time. Direct deposit was instant.

I have used EmigrantDirect, which had a crappy web interface, and a "bureaucratic nightmare" of a signup process which included filling out an online application so that they could mail you your credentials (and an EmigrantDirect hat; Snuggie book-light, anyone?) There was a several-day lag between deposits and withdrawals between accounts.

I have used HSBC Direct (when I was using HSBC for my regular banking as well, and that made ALL the difference) and also had no problem with them, though HSBC became physically less convenient for my normal banking, when I decided to hit up the credit union. The APY on my credit union savings account is not high, and doesn't even come close to the now-low ING Direct rates, but I have not looked back. Transfers from my HSBC checking to my online savings were instant.

In short--it really doesn't matter much what bank you choose for a savings account. Get one that is FDIC insured, gives you reasonably easy access to your money, and doesn't have fees or restrictions on earning interest. If they happen to have a social agenda that you agree with, knock yourself out.
posted by coryinabox at 6:40 AM on March 27

I switched my savings account to HSBC Direct a few years ago. At the time, they were offering 6% compared to the 0.2% I was getting at Chase. True story.

Granted, rates have decreased significantly since then, but there's still a significant improvement over brick & mortar banks. I've always been happy with them. The only downside is that bank to bank transfers can take a few days. As long as you plan ahead you'll be fine though.

My checking and brokerage is with Schwab, which has been awesome. They actually just started offering savings accounts as well. I think those are at 2%, but I could be wrong. Their checking is paying 1% maybe.

Personally, I would still be uneasy about putting my money in a smaller bank. Yeah, it's FDIC insured, but I wouldn't want to deal with that if I didn't have to.
posted by JuiceBoxHero at 7:22 AM on March 27

Others have mentioned bank-to-bank transfers taking a few days. I suppose this may be true depending on how your bank handles ACH transfers, but in my case all transfers I've made to and from my EmigrantDirect savings account have happened in one business day. For example, if I schedule a transfer out of my online savings account before 5 PM on Monday, the funds are ready for use in my checking account by 8 AM Tuesday, and vice versa. I've been very pleased with this. Their rates may be dropping, but so are everyone else's. They will go back up eventually. Still beats the rate my credit union is offering, and probably always will...

I have found that whatever rate is published on the EmigrantDirect home page is the rate they are currently paying. However, it can change at any time. That's just the nature of these kinds of accounts.
posted by Nothlit at 7:45 AM on March 27

Shore bank is local here in Chicago, and while you may have reservations about their relationship with religious organizations that shouldn't be the deciding factor in not working with them. Check out the Wiki page on them here (which is a little ad copy but still a good source of info).

Currently they are a big mover in promoting/funding green projects and you should remember that that they are a community development bank, and they have a long history of really impressive work on providing affordable housing here in Chicago. Which is likely why they deal so much with religious organizations - in many neighborhoods those are the only institutions left.

As far as banks go, they are one of the good ones. Note: I not a customer - yet.
posted by zenon at 8:13 AM on March 27

I pretty much share your perspective on religion, but to sort of extend what you said in (b), the folks your bank -- any bank or financial institution, for that matter -- deals with is, to a large extent, beyond your control. I'd say the odds are a billion to one that any bank you want to deal with has no personal and/or institutional clients that are religiously affiliated. The only real alternatives are to found an atheists-only credit union (and seriously, if you do, please let me know!) or stuff your cash in a mattress.

My primary savings account is at ING. They recently knocked their APY down another notch to 1.5%, which isn't great but it beats all my local banks. Their web interface is very well done and the service I've received from them is pretty good. If a good interface and a moderately decent rate is all you're after, I highly recommend them. I recently considered opening a ShoreBank account because it had a decent rate and because of their support of sustainability projects. I didn't, not because of their support of faith-based organizations, but for simplicity's sake. To me, jumping from bank to bank for a rate that may, a week or month later, fall to what the previous bank's was at just isn't worth the effort.

If the faith-based stuff really bugs you but you still want some measure of social conscience in your savings, consider a credit union. The savings interest rates (example) are not as good as with HSBC or ING or some other gigantic bank, but they're (typically locally-based) member-owned non-profits, insured by the NCUA, and offer really competitive rates on loans to members. (If I ever get a mortgage, it's going to be with a credit union.) Also, their fees are typically way lower than regular banks. Web interfaces differ between CUs, but the credit union I'm with has an acceptable one which is listed with Mint. It'll probably require just a bit of leg work on your part to determine which, if any, CU you can join, but you may find it's worth your while.
posted by cog_nate at 8:51 AM on March 27

I just started using SmartyPig for my savings. I like it because I can save my money in separate "buckets" for each of my goals.
posted by jacquilinala at 8:51 AM on March 27

(Also, thanks for reminding me of Get Rich Slowly. I read it once a while back but had never returned. It's really good.)
posted by cog_nate at 8:55 AM on March 27

I know a few people who've used Shorebank and had good experiences. As far as I know they aren't religious. However, these people don't have a problem with religious as long as their aims are the same. For instance, they're willing to co-file with a Catholic order of nuns against racist predatory lending at Wells Fargo or whereever, even if they find much of the Catholic dogma completely at odds with their belief systems.

I haven't checked their rates, but other "socially conscious" financial institutions that I've heard good things about include Self Help Credit Union and Louisville Community Development Bank.

These institutions (including Shorebank) do great work in keeping the money in the community and not just lining the exec's pockets. If there's any way to support their efforts without costing you money, I hope you'll try them. They do good work with the people who really need it.
posted by small_ruminant at 9:44 AM on March 27

Thanks to everyone for the thoughtful advice and suggestions so far. I'm not marking best answers yet since I'm still in the process of deciding.

One thing I want to add:

"If the faith-based stuff really bugs you..."

Just to clarify, it's not so much that I'm bugged by the idea of opening a savings account with a bank that has a lot of "faith-based" clients. Obviously it would be impossible for an American bank to have a policy of only dealing with secular humanists. It's more that reading their promotional copy about faith-based investing got me thinking: "hm, what they consider 'socially conscious' might not be something I count as 'socially conscious,' so it might be an illusory upside of having an account with them."

(However, zenon and small_ruminant's point is very well taken: if churches happen to be forces for good in certain communities, then the "doing good" factor matters more than my personal views on religion.)
posted by Jaltcoh at 11:25 AM on March 27

Wow, SmartyPig has a good APY -- 3.25% as of today, higher than any of the ones mentioned in the Get Rich Slowly post. I'll have to think about that -- thanks, jacquilinala.
posted by Jaltcoh at 12:21 PM on March 27

I just opened a ShoreBank account, and it's true the web interface sucks. However, I'm using it to force myself to save, and plan on only accessing the money at tax time where it'll go straight into an IRA, so it doesn't bother me. If you want to be able to do transfers quickly, etc., it may not be a good option.

The initial opening of the account too 2 days -- they deposit money into your funding account and you have to verify the amounts to prove it's really your account, but there were no hassles.
posted by snickerdoodle at 9:24 AM on March 28

My opinion hasn't changed from the earlier thread-- if your top priority is to find the best web interface or the very best customer service, then maybe ShoreBank isn't right for you, but I've never had problems with them so I don't see either the interface or customer service as a negative, and the positives are outstanding. They do fantastic work as far as supporting small businesses in poor/minority communities, creating affordable housing, supporting the environment, and responsibly financing mortgages in lower-income and minority individuals.

Like others have said, churches and other religious organizations are often doing the bulk of the community development work in low income communities, so if your goal is community development/doing good, it's almost inevitable that you'll be supporting them unless you have an explicit policy against lending to churches. The link you posted talks about "capital for faith-based organizations to renovate buildings, create programs such as day care and financial literacy, or add complementary businesses such as book stores... partnerships with faith-based organizations to link congregation members with jobs, skills training and support services."

And if you're concerned about the break-down-- that all/most of the money that they call "socially responsible" is going to religious organizations-- see here:

* $415 million in community development loans made in 2007.
* $185 million in conservation loans made in 2007.
* $40 million in loans to faith-based organizations in 2007.
posted by EmilyClimbs at 10:53 AM on March 28

In case anyone's wondering, I ended up going with HSBC because I realized they have several ATMs around town, which lets me avoid ATM fees.

Before I noticed that factor, the decision was very, very close. I almost felt like flipping a coin to decide.

If anyone's reading this because they have a similar question, all I can say is that based on reading this thread, the previous AskMe, and the Get Rich Slowly post, the feedback on ShoreBank was overwhelmingly positive.

Thanks again for all the thoughtful advice.
posted by Jaltcoh at 6:49 AM on April 28